Money and Kids: 8 Tips to Raise Financially Savvy Kids
Money and Kids: 8 Tips to Raise Financially Savvy Kids
Most American kids today live in relative abundance. They enjoy more material possessions than their parents had growing up.
More gadgets, more toys, more clothes and more activities….
Everything is bigger, from houses to birthday parties.
So how do kids learn to value money when it’s pouring in from grandparents, allowances and even the Tooth Fairy? How do we give them a feel for the value of money and the importance of saving?
The answer is thrift.
A word like “thrift” almost seems old-fashioned these days, something your grandmother might have said. But thrift is the key to savings, and with a potential recession looming over us, it may be more important than ever.
Here are eight tips to help raise financially literate kids…
- Consider a Virtual Allowance
We’ve all heard that we should start teaching kids to put away savings — whether it be in a piggy bank or an actual savings account. Many parents opt for a simple free ledger app such as Bankaroo, iAllowance or PiggyBot and keep a “virtual allowance” for their kids.
Often these free apps have a budgeting feature that allows you to show kids how to set aside money for a charitable donation, save for something they want to buy and simply watch their savings add up.
Pro tip: if you are using a “virtual allowance,” be sure to pay monthly interest on the amount saved! Then show your child how the interest adds up over time, reinforcing the fact that even a small savings account adds up over time!
- Make Them Pay… No, Really
Ownership also teaches thrift and savings, so the next time your child begs for an upgraded bicycle or game console, make them pay for a portion of it. You may only ask for a nominal amount, but having to dig into their own pockets to chip in will cement the feeling of ownership and responsibility.
- Role Play
Hands-on learning is always a powerful tool, and children learn well from play. You can use play money and set up a store with toys or groceries to practice planning and purchasing. Games like Monopoly and Life offer valuable practice, too. These classic games are now available as apps as well!
- Promote Giving
Choosing a charity your child loves teaches compassion and sharing and makes a good companion to budgeting lessons. Find a charity your child truly cares about and can get behind as a priority, such as a local no-kill shelter or food bank.
- There’s an App for That
We live in the age of children who grew up playing with tablets and phones, so turning to apps to teach savings is only natural. Fortunately, there are some fantastic free and low-cost apps for iOS and Android that teach thrift, savings, budgeting and other financial literacy concepts.
Check out Savings Spree for kids 7 and older. This award-winning and visually appealing app teaches about saving and the risks of impulse spending. Kids use virtual money and have a safe environment in which to learn from good choices — and bad ones.
For slightly younger children, the Renegade Buggies app teaches healthy consumer spending habits in a virtual grocery store game. This app, designed by the National Center for Families Learning (NCFL), really hammers home solid spending strategies that children can employ for the rest of their lives.
FamZoo is a smart choice for tweens and young teens. This app allows kids to manage their savings and allowance in a parent-supervised app. Its features include lessons in preventing debt, a mechanism for safe online purchases and a tracker for chores and odd jobs.
- Use What You Have
Of course, thrift extends beyond pennies, and there are valuable lessons to be found in mending a sock, sewing a patch on jeans, repairing a broken item or improvising something at home instead of purchasing something new.
Encourage the reuse when possible of plastic bags and cups, foil and scrap paper. Making these examples part of your lifestyle assures that thrift becomes a natural reflex.
Food thrift is another valuable object lesson. Plant a budding potato, or create a container garden from seeds or sprouted kitchen scraps.
Homemade compost is a thrifty and fun family project! Freeze and label leftovers and have an occasional “leftover night,” emphasizing the grocery savings over time of this habit.
- Small Actions Can Save Big Bucks
With the summer air-conditioning power bills almost upon us, try to find ways to work together to bring the power bill down. Have your child regularly scout the house for lights left on and TVs on in the background with no one watching.
Some parents even choose to impose a small fine when children leave lights on or doors standing open.
Let your child take responsibility for bumping up the thermostat before leaving the house so that an empty house is not being overly cooled. Work together to program the thermostat for energy-saving presets, and even celebrate with a little reward like an ice cream outing if you can work together to keep the power bill below a predetermined amount.
- Practice What You Preach
Our day-to-day example and lifestyle choices often speak louder than the object lessons we give. Everyday examples of spending choices, budgeting decisions and simple thrift can be discussed with kids.
By opening up this line of communication, children can not only learn from you but contribute ideas that may surprise you! This approach also lets your child know that questions are welcomed.
Don’t hesitate to talk about real numbers and let your child know your motivations behind certain decisions.
Some families find it helpful to have a family council meeting to plan a budget, discuss ways to cut spending and generate ideas for thrifty choices. The advantage of this approach is that when everyone contributes to the discussion, there is more group buy-in and more likelihood of positive participation.
However you go about it, teaching thrift and savings are important parental responsibilities, and they are lessons that will stay with your child forever.
You may even improve some of your own habits and learn something along the way as well!